Tissue and Hygiene Quarterly Briefing Q3 2019

August 2019

The third quarter forecast update demonstrates yet another marginal global downgrade to industry projections, indicative of persistent macroeconomic weakness and still shaky consumer sentiment as a result. Long-term untapped potential globally remains significant. However, structural changes that shape consumer demand, coupled with potential risks of recession and global downturn, signal the need to prepare for the headwinds in the short to medium term and assess strategies accordingly.

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Key Findings

Attesting to still challenging global environment, the third quarter forecast update shows another marginal downgrade to projections

On the positive side, the global marketplace still offers significant unmet potential to secure long-term industry growth. However, the industry continues to face and will be facing going forward a number of challenges due to macroeconomic and political headwinds, shaky consumer sentiment, structural changes to consumer demand (especially in developing markets approaching saturation point and hence threats of commoditisation), pricing and competitive pressures.

Number of markets of interest are still not out of the “woods”, while China still shows strength

Number of markets of interest to the industry, such as Brazil and Turkey for example, continue to show signs of weakness and yet another quarter of downgrade to projections. However, China still demonstrates signs of healthy demand and growth, also reflected in the third quarter upgrade to forecast projections.

Political uncertainties and mounting talk of recession and global downturn are at play, with risk scenarios signalling sizeable losses in the developing markets

Developing markets remain the key focus of attention for the industry, as key global players are seeking to reduce their dependence on slow-growing developed regions and tap into a vast unmet potential of the developing world. However, risks to growth over the next few years come from mounting talk of a US recession and global downturn, which would entail losses for the industry’s revenues. The downturn will likely undermine the industry’s focus on improved pricing and the premium segment as financial insecurities will force consumers to rein in spending.

Further price increases, subsequent to 2018 and early 2019 can be problematic

With the talk of impending economic headwinds and resulting jittery consumer sentiment, current industry progression in premium innovation as well as price increases might become more problematic going forward, calling for further focus on cost efficiencies and careful examination of opportunities by market and product category to secure best ROI in anticipation of headwinds.

Introduction

Scope

Q3 Macroeconomic Update

Global baseline outlook
Real GDP annual growth forecasts and revisions from last quarter (1)
Real GDP annual growth forecasts and revisions from last quarter (2)
Global risks
Global Risk Index scores and rankings
Global Macroeconomic Risks for Tissue and Hygiene Industry

Q3 Tissue and Hygiene Industry Update

Key findings
Updated quarterly forecast: marginal downgrade across categories
Talks of global recession: sizeable projected losses for the industry
US, Brazil, Mexico, Turkey: not yet out of the woods in the third quarter
US (1): continuing risk to revenues as political uncertainties persist
US (2): pricing pressures persist, discounts are still in place
Brazil still in the red: price sensitivity coupled with risk of commoditisation
China pushes on, with further upgrade to projections in third quarter
Western Europe (1): UK to carry the brunt of Brexit aftermath
Western Europe (2): prices, consumer sentiment, private label
Key takeaways

Appendix

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for the Industry Forecast Model
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